August 11, 2022

Stocks & Bonds: A Mixed Finish After a Downgrade of Portugal’s Debt

The credit ratings agency cited concern that Portugal would not be able to meet goals for reducing its deficit because of the “formidable challenges” the country is facing in cutting spending.

The Dow Jones industrial average fell 12.90, or 0.1 percent, to close at 12,569.87. The Dow had risen as many as 19 points in morning trading after the Commerce Department reported an increase in orders for manufactured goods.

The Standard Poor’s 500-stock index fell 1.79, or 0.1 percent, to 1,337.88. The Nasdaq composite index rose 9.74, or 0.3 percent, to 2,825.77.

Bond prices rose, sending yields lower, as investors sought the relative safety of Treasuries. The benchmark 10-year note rose 17/32, to 100 2/32, and the yield fell to 3.12 percent from 3.18 percent late Friday.

Investors have been worried that Europe’s debt problems could slow the global economy and cause a crisis for European banks. “The European debt crisis is going to be with us for a while,” said David Kelly, chief market strategist at J. P. Morgan Funds. “There still is a very big issue out there.”

Tuesday’s trading volume was light with many traders on vacation after the United States markets were closed Monday for the Fourth of July holiday. Many investors are looking ahead to next week, when the aluminum maker Alcoa becomes the first major United States company to report results for the most recent quarter.

Last week, the Dow rose 648 points, its best week in two years, after Nike reported strong earnings and Greece cleared its final hurdle to receive another round of loans. Automakers also reported that their sales rose 7 percent in June compared with the comparable month a year ago.

Those gains erased nearly six weeks of losses. Stocks had been falling since late April because of concerns about the debt crisis in Europe, weak home sales in the United States and slow manufacturing. By mid-June, stocks had given up most of their gains for the year.

With last week’s rally, the Dow is down 1.8 percent from April 29, when it reached a three-year high. The Dow is up 8.6 percent for the year. The S. P. 500 is up 6.4 percent and the Nasdaq composite is up 6.5 percent.

“There hasn’t yet really been a reason to get concerned about corporate America,” said Randall Warren, chief investment officer of Warren Financial Service. “It’s the rest of the America that’s struggling.”

Even though companies have been reporting higher profits, unemployment has remained stubbornly high since the recession officially ended in June 2009. The Labor Department will report the latest figures on unemployment and payrolls on Friday, and analysts expect to hear more bad news. Many predict that the unemployment rate will remain at 9.1 percent, unchanged from May. They also expect that employers added only 90,000 jobs last month, below the 100,000 threshold that economists say is needed to prevent the unemployment rate from increasing.

Several stocks rose sharply on deals and other news. Immucor, a maker of blood-testing equipment, rose more than 30 percent after it agreed to be bought by a private investment firm, TPG Capital, in a deal worth $1.97 billion.

Southern Union, which operates oil pipelines, rose 4.2 percent after Energy Transfer Equity said it would pay $5.1 billion for the company. The deal trumped a $4.9 billion bid made in late June by a rival, the Williams Companies.

Netflix rose 8.1 percent, more than any company in the S. P. 500, after announcing that it would expand its online video streaming service to 43 countries in Latin America and the Caribbean.

Chevron rose 1 percent, more than any stock in the Dow index, after the price of crude oil rose $1.95, to $96.89 a barrel.

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